Correlation Between Northrop Grumman and Immunoprecise Antibodies

Can any of the company-specific risk be diversified away by investing in both Northrop Grumman and Immunoprecise Antibodies at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Northrop Grumman and Immunoprecise Antibodies into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Northrop Grumman and Immunoprecise Antibodies, you can compare the effects of market volatilities on Northrop Grumman and Immunoprecise Antibodies and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Northrop Grumman with a short position of Immunoprecise Antibodies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northrop Grumman and Immunoprecise Antibodies.

Diversification Opportunities for Northrop Grumman and Immunoprecise Antibodies

-0.73

Correlation Coefficient

Northrop Grumman  Immunoprecise Antibodies

Pay attention - limited upside

The 3 months correlation between Northrop and Immunoprecise is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Northrop Grumman and Immunoprecise Antibodies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Immunoprecise Antibodies and Northrop Grumman is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Northrop Grumman are associated (or correlated) with Immunoprecise Antibodies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Immunoprecise Antibodies has no effect on the direction of Northrop Grumman i.e., Northrop Grumman and Immunoprecise Antibodies go up and down completely randomly.

Pair Corralation between Northrop Grumman and Immunoprecise Antibodies

Considering the 90-day investment horizon Northrop Grumman is expected to generate 0.16 times more return on investment than Immunoprecise Antibodies. However, Northrop Grumman is 6.26 times less risky than Immunoprecise Antibodies. It trades about 0.1 of its potential returns per unit of risk. Immunoprecise Antibodies is currently generating about 0.0 per unit of risk. If you would invest  52,075  in Northrop Grumman on July 19, 2024 and sell it today you would earn a total of  1,068  from holding Northrop Grumman or generate 2.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Northrop Grumman  vs.  Immunoprecise Antibodies

Northrop Grumman

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Northrop Grumman are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, Northrop Grumman exhibited solid returns over the last few months and may actually be approaching a breakup point.

Immunoprecise Antibodies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Immunoprecise Antibodies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in November 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Northrop Grumman and Immunoprecise Antibodies

The main advantage of trading using opposite Northrop Grumman and Immunoprecise Antibodies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northrop Grumman position performs unexpectedly, Immunoprecise Antibodies can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Immunoprecise Antibodies will offset losses from the drop in Immunoprecise Antibodies' long position.

The idea behind Northrop Grumman and Immunoprecise Antibodies pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.